(Keith Lambert and Victoria Meadows are the chief operating officer and chief strategic officer at the Lansing Economic Area Partnership.)
In the Lansing area, there were 15,275 unique job postings in September of 2020. That figure steadily climbed 44% over the following 12 months to 22,042 in August 2021. This impressive shift is likely tied to the large number of people that had left the workforce for various reasons over the past 18 months, including longer-term unemployment benefits lessening the financial pressure to return to work, hesitancy surrounding the pandemic and its effect on working conditions, perceived or actual risk of COVID-19 infection and family safety, schooling circumstances and childcare availability.
Each person and family have been considering the opportunity cost around working relatively low-wage jobs, and many have concluded that it is not in their best interests for now — creating a new labor gap.
For instance, we know the region’s labor force participation rate dropped from 78.7% in 2019 to under 75% in the first quarter of 2021, and grew only marginally to 75.4% by July. We also know from national data that this labor force participation rate drop was disproportionately women. Nationwide, there are 1.8 million fewer women in the labor force than before the pandemic.
Of late, the sense is competitive pressures have been driving up wages for low-skill jobs. Wage pressures have been felt strongly by industries that pay the bulk of their employees under $20 an hour, such as retail, hospitality and restaurants, wholesalers and distributors, manufacturers, healthcare and social services. The Washington Post reports that the average pay topped $15 an hour at U.S. restaurants over the summer. Sign-on bonuses and referral bonuses are more commonplace from restaurant chains such as Papa John’s, Chipotle, Subway and Panera Bread to lure in new employees.
These same industry sectors make up a large portion of the Lansing region’s 12,608 unemployed individuals as of July 2021: 15% in health care and social assistance; 12% in manufacturing; 11% in retail; 9% in accommodations and food services; and 8% in wholesale trade. Those five industry sectors alone constitute over half of the region’s unemployed.
While these wage pressures are a reality for businesses in such industries around the country, and very much so for businesses in the Lansing region, we see positive signs of prominent companies doing large hiring events with success. Examples include MWC operating as Glanbia Nutritionals in St. Johns, the world’s top producer of American-style cheddar cheese blocks, which has hired over 250 people over the past two years, coinciding with the operational launch of their new facilities in October of 2020.
In January 2021, LEAP announced Shyft Group’s plans to expand manufacturing operations at their Charlotte campus and create hundreds of jobs. McKesson, which just announced its new cutting-edge distribution center in Delhi Township last spring, has had early success with monthly hiring events since June as it seeks to hire over 100 new employees. LEAP worked with all these companies to understand the local labor market and connect to the tapestry of workforce development resources and support organizations, including Capital Area Michigan Works!, Lansing Community College and Michigan State University.
The companies we see finding the most success focus on company culture, adequate and competitive compensation and benefits, building a talent pipeline through partnerships, and leveraging available workforce resources and tools. LEAP is constantly connecting companies with our many partners in those spaces. We expect a new labor equilibrium to emerge in the coming months after the rapid change and evolution witnessed over recent months. Extended unemployment benefits ended in early September, childcare capacity and ample financial support for both providers and parents should be in place in 2022, and schooling policy is likely to be more consistently in-person.
As long as we as a society continue to make positive strides in the battle against COVID-19, we are optimistic. As an economic development organization with a mission to build inclusive prosperity across the Lansing tri-county region, we recognize increased wages create buying power and wealth opportunities for people of all skill sets and educational levels, but know the shift must be gradual to be sustainable. It will be interesting to watch the sectors comprising most of those lower wage jobs over the coming months.
Our region is blessed with a certain degree of stability as the historic seat of state government and home to Michigan State University, alongside a booming insurance industry growing at 10 times the national average. Yet manufacturing and technology employment growth and diversification continues to be a priority to elevate our economic trajectory, and we face an intensely competitive landscape.
Broad-based economic mobility requires building more pathways across industries for individuals to elevate themselves. LEAP and our partners are laser-focused on projects, programs and initiatives to make that happen in the Lansing area.
No comments on this item Please log in to comment by clicking here